What we do to ensure your profitability

Effective risk management requires a special skill set and an experienced partner.

United Capital Markets’ (UCM) principals came together over 20 years ago, bringing decades of experience in capital markets, mortgage banking and financial hedging to the mortgage banking industry.

UCM clients are banks and independent mortgage bankers who own MSRs. Many of these institutions are uncomfortable with the volatility of MSRs so they record them at very “conservative” values, often well below market value. This penalizes earnings by not fully reflecting the value of servicing produced. The servicing assets that these institutions own can yield an 8% to 12% return if properly managed. There are very few businesses available to banks that offer those kinds of financial returns without assuming high levels of credit risk.

The Solutions We Bring to Bear

As a result, UCM has become the leading provider of innovative risk management services by offering risk management optimized by:

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Strategy

It’s possible to hedge using a “portfolio strategy” that generates income, as opposed to an “insurance strategy” that guarantees a cost to hedge.

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Effectiveness

UCM provides highly correlated hedges that qualify for hedge accounting treatment and thereby prove their effectiveness.

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Sufficiency

Hedging requires a capital outlay, but UCM minimizes that outlay by using exchange traded futures and options-based hedges, requiring minimal capital.

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Analytics

UCM uses state-of-the-art risk analytics to graphically demonstrate projected price performance so clients can see their financial position at a glance. This allows UCM to measure and report actual hedge performance daily.

Compliance

UCM complies with all accounting and regulatory rules.

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MSR RISK MANAGEMENT HISTORY

Beginning in 2006, FAS 156 has allowed companies to elect fair value accounting for MSRs.

This has greatly simplified hedge accounting such that all of UCM’s clients have elected to account for their MSRs using fair value. However, fair value accounting for MSRs is an option, not a requirement, and UCM can provide highly effective MSR hedges no matter which method of accounting its clients choose.

Why Choose UCM?

Why Choose UCM?